So that’s made the exercise of writing a “delightfully short” guide to social media ROI all the more fun and challenging. I’ve given myself under 1,000 words to provide an overview of social media ROI and how to apply it to your social media marketing efforts. I’d love to hear your feedback in the comments!

[Interested in listening to this post in podcast format? We invite you to check out Buffer’s very own podcast – The Science of Social Media!]

What Does Social Media ROI Look Like?

ROI has its roots in business finance. Businesses use ROI to calculate the dollars-and-cents return on a dollars-and-cents investment.

Social media ROI is what you get back from all the time, effort, and resources you commit to social. And it’s best calculated with dollar amounts.

Of course, there are no dollar signs dangling from retweets or likes. Twitter, Facebook, and others are no-cost marketing channels to join, potentially a zero-dollar investment (which makes any return exponentially fantastic, right!).

So in order to track ROI, the key elements would be:

Identifying your monetary investment in social media

Attaching a dollar amount to your social media goals.

Difficult? Possibly.

Possible? Definitely.

How to Measure Social Media ROI

ROI = (return – investment) / investment

This straightforward formula has just the two parts: Return and Investment. Here’s how to figure out each of the two values on social media.

How to Calculate Your Return

“Return” is one of the trickier elements of social media ROI because it can mean so many different things to so many different marketers. For instance, we stopped calculating direct social media ROI at the Buffer blog when our conversion goals changed.

So first things first: What do you want to achieve?

What is your overarching goal with social media? And how can you specify the right actions that meet this goal?

Then, how much are these actions worth to you?

Step one: Choose a goal

There’s a whole host of possibilities for choosing which goals and actions to track. Troels Kjems at Think Digital shared a great list. Here’s a bit from Troels’s list and a few of our ideas, too.

New followers

Clicks on link in update

Online purchases

Filled out contact form

Signups for newsletter

Downloads of .PDF file

Time spent on important webpage

Step two: Track your goal

Choose one or more of the above conversion goals, and start tracking. You can track website actions (sales, downloads, signups) in Google Analytics by setting up goals and event tracking. You can track social media interactions (shares, likes, follows) in Buffer.

Step three: Assign a monetary value

Once you’ve chosen a goal and tracked the actions, it’s time to tackle the dollars-and-cents side of ROI. There are several different methods to choose from here:

Lifetime value – How much do you earn on average from a customer? (There’s a quick calculator here, and a helpful article here.)

Lifetime value, multiplied by conversion rate – How much is each potential visit worth to you?

Average sale – How much is the average purchase through your site?

PPC costs – How much would you end up paying if you were to use ads to achieve the same social media actions?

The PPC costs seem particularly interesting to me. Basically, you compare the amount you would pay in advertising for a new follower, click, impression, etc. and extrapolate for what you actually earn via your organic (i.e., not paid) social media sharing.

If it costs $0.50 to gain a single new fan to your Facebook page, then your organic gain of 50 fans is potentially worth $25.

Through experimentation and research with the Buffer accounts we found some benchmarks that might be helpful for comparison. (You can run a 5-day campaign with social ads to get a baseline specific to you.)

Facebook like average – $0.50 per page like

Facebook reach average – $0.59 per thousand impressions

Facebook click average – $0.50 per click

Promoted tweet – $3.50 per thousand impressions

LinkedIn – $2.00 per click

How to Calculate Your Investment

While it’s true that participation on Twitter, Facebook, and the like is free, your time is not. Your social media tools may not be. And your ad spend is worth real dollars.

Your time – Multiply labor-cost per hour by the number of hours you’ve committed over a given period (depending on whether you’re measuring social media ROI for the week, the month, per campaign, etc.). Salary.com found the median hourly rate for social media managers to be $51. You can also look up salary levels for social media managers in your are using Glassdoor.

Your social media tools – Add up the costs of all the tools and services you use for social media. Find the weekly or monthly costs using a bit of math (divide annual fees by 52 for the weekly cost, by 12 for the monthly cost).

Schedule, publish & analyze your posts across the top social networks, all in one place.

Loving the short posts! Keep them coming. 🙂 Blog posts have gotten so long and while the information’s really helpful, when you only have a few minutes until your next meeting, it sucks not being able to get through a whole post!

This was a really instructive read.
We ran a full on analysis of our traffic / ROI of each channel… last month and were surprised to see that Quora and Slideshare were the most valuable channels for us. Since then we are focusing mainly on these and Quora now brings us twice times more leads than it used to.

Unrelated but I was wondering reading the article, if anyone ever benefited from running Linkedin ads. Their CPC is really high compared to other channels. We tried promoting both our product and content with their ads but had terrible results. I’d love to hear about anyone else’s experience with that.

Kevan, friend, you delivered! This is EXACTLY the kind of information I’ve been trying to articulate. I will definitely be using this post for the class I teach and with my clients. Thank you 🙂

BeaZea

Thank you Kevan for this great article.
I currently work for a B2B company. in our type of business Leads and Customers are created based on multiple touches; their social actions are only one step of many. This changes the conversation to “social influence on ROI” and makes social ROI measuring even more complicated.
Still your article was on the spot.

Hi, I dont get it. I m new to this so excuse mistakes *lol – A brand has 98,000 Fans on FB. The extended circle of those who potentially see a promoted post are 980,000 (say each fan has 100 friends). So we have 970,2000 yet non-followers who could see the post theoretically. Say 0.25% of those actually like the page after the ad and the monetary value per like is calculated at 0.25€. Thats a return of 6063€ for 500€ investment. That sounds totally unrealistic. Where did I go totally wrong? Thanks

Sara

I’m with you Sven. I haven’t yet understand this. I wonder what can we reply to our customer when after we presented this figures he goes “so, where is my money?” Should we say “it’s all in the hypothetically-theory bank”? How do we make the conversion to reality? Anyone can give us a feedback, please?

Meesha Dotcom

ROI is not metrics, but you need metrics to measure business value of an initiative,
whether it’s driven by social media or not. The equation goes like this:

Thanks for sharing such an informative topic on ” Guide to Calculate Social Media ROI”. The information you put here is really helpful. The simplest way to measure social media ROI involves measuring your followers on Twitter, your likes on Facebook, and all other social media sites that you are associated with.http://www.webtage.com/services/social-media/

Toàn Đình Đặng

I love your tracking ROI Social Media

Alex Nech

Hey Kevan, great article as always! I was explaining this concept to my client and he found it very useful to read the case study. One word of caution, I think the RoI formula is missing brackets as it’s supposed to be (benefits – costs)/costs *100 or (benefits – costs)*100/costs, both would result in the same outcome. Without brackets it exaggerates the costs by a factor of 100 🙂

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